IBM shares rose up to 4% in extended trading on Monday after the enterprise technology and services maker reported first-quarter earnings that were better than analysts expected.
This is how the company did it:
- Merits: Adjusted for $ 1.77 per share versus $ 1.63 per share as analysts expected, Refinitiv said.
- Revenue: According to Refinitiv, $ 17.73 billion versus $ 17.35 billion as analysts expected.
Revenue for the quarter increased 0.9% on a year-on-year basis, compared to a 6% decrease in the previous quarter. The company reiterated its previous full-year revenue growth forecasts.
“I think the spending environment is improving overall, Matt. I think I can definitely say that compared to the fourth quarter,” IBM CEO Arvind Krishna responded to a question from an analyst on a conference call.
IBM’s Global Technology Services segment, which handles managed services, outsourcing and support, contributed $ 6.37 billion to revenue. Revenue was down 1% year over year but was above the FactSet consensus estimate of $ 6.32 billion. IBM plans to outsource part of the segment as a separate public company called Kyndryl by the end of the year.
“During the quarter, project activity and customer-based business volume have improved, including in some of the industries hardest hit by the pandemic, such as retail and consumer goods,” said Jim Kavanaugh, chief financial officer of IBM.
IBM’s Cloud and Cognitive Software division, which also includes Red Hat, had sales of $ 5.44 billion, up 4% and more than the FactSet consensus of $ 5.30 billion . IBM reported investments of $ 529 million for the quarter, a decrease of 28%.
Global Business Services, the entity that includes consulting, contributed $ 4.23 billion to revenue, up 2% and more than the consensus of $ 4.03 billion.
System revenue of $ 1.43 billion from mainframe computer and other hardware sales increased 4%, above the consensus estimate of $ 1.29 billion.
“We had traction in areas like financial services, where robust market volatility drove demand for capacity increases,” said Kavanaugh.
In the quarter, IBM announced that it had acquired 7Summits, a Salesforce consulting firm, from private equity firm Sverica Capital Management and bought Taos, a consulting group that deals with cloud migrations. IBM also said it had sold 250 patents to the food company Instacart.
Excluding the after-hours move, IBM shares have risen roughly 6% since early 2021, while the S&P 500 index has risen nearly 11% over the same period.
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